iPhone Democracy

August 20, 2014

Once upon a time, there was a startup, the product of which completely changed our world. Recently, however, this startup is in a deep crisis. Its founding fathers adopted the US Declaration of Independence on July 4, 1776. Yes, we are talking about the main startup of the 18th century, the influence of which has long gone beyond its own borders, and whose economy is a world leader over the last few decades. However, the product that this startup "sells" has remained unchanged for 238 years—democracy.

Competing with other alternatives like dictatorship, monarchy, autocracy or totalitarianism, democracy has proved its viability. Nevertheless Winston Churchill once said: "Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of Government except all those other forms that have been tried from time to time."

Today, almost every country in the world is a democracy, or at least is positioning itself to be. In the period from 1972 to 2005, 67 countries have become democratic. However, the process of democratization can be very painful, especially in those countries where there was absolutism from time immemorial. Examples of this are the "Arab Spring", "Orange Revolution", and the "Rose Revolution." It is worth noting that even the most painful transition is not yet a guarantee of stability and implementation of democratic values. As it turned out, in fact, in some regions of the world, democracy allowed for a clearing of the status-quo situation, but only on a short-term horizon.

In his book, "America at the Crossroads" Francis Fukuyama argues that one of the aspects of the theory of political development is an empirical relationship between economic development and democracy. According to Adam Przeworski and Fernando Limongi, although the transition to democracy is carried out at the same rate at any level of development, reversal of this process is much more likely if the country has not reached a certain level of development, when the per capita income GDP is about US$6,000. Political scientists studied 135 countries between 1950 and 1990, and in today's terms this figure is about US$10,900.

Now let's look at the statistics of the IMFand the World Bank. According to this data, from 2011 to 2013, the average GDP per capita in Ukraine is US$7,200, in Georgia US$ 5,800, in Iraq US$ 7,000, in Syria US$ 5,100, and in Egypt US$ 6,000. All these countries "bought" democracy, and some of them have paid a high price (loss of Crimea, Abkhazia, South Ossetia), but could not fully take advantage of it. It turns out that in some regions of the world, democracy cannot be easily implemented, while the US continues to insist that many countries still stand in line.

This is reminiscent of the hype surrounding each new iPhone model that unfortunately, not everyone can afford because of its high cost, as the example of a Chinese man selling his own kidney to pay for one proves. We are witnessing such examples, for example, in Ukraine or Georgia. Having bought "iPhone-democracy", these countries have lost part of their territory. Skillful Western sellers of "iPhone-democracy" conveniently forgot to mention a very important detail. Namely, in order to fully enjoy all the delights of "iPhone-democracy" you must buy all sorts of applications, constantly update them, and share all your personal information, even if it is a state secret. And for this, of course, you first need to be solvent. The ability to pay may vary, either with dollars or oil. And for additional costs on infrastructural development you can take credit from exporting countries, but this can come at the cost of your de-facto sovereignty. An additional "bonus" is the mandatory implementation of legislation, which can sometimes be contrary to the national interests of the country. And if you cannot perform the undertaken obligations, you will have in your hands not an iPhone, but an ordinary phone for a fabulous price, which, as it turned out, you never needed.

It appears that the United States as the world's leading startup faced with several aspects of the Icarus paradox. The US ceased to consider the needs of consumers, fixated on one successful project (The Marshall Plan), became unresponsive to changes, and is now investing its capital and reputation in countries that they know little about. The origin of problems in US domestic and foreign policy are indirectly similar to the collapse of the General Motors Company. The book Reinventing Management described it as such: "The Company was the model of bureaucracy with formal rules and procedures, a clear hierarchy, and standardized inputs and outputs. This worked well for years, perhaps too well—General Motors became dominant, and gradually took control over not just its supply chain but of its customers as well". Further, D. Birkinshaw argues that John Kenneth Galbraith was referring to GM, emphasizing in 1967 in his book The New Industrial State that, "The initiative in deciding what is to be produced comes not from the sovereign consumer who, through the market, issues the instructions that bend the productive mechanism to his ultimate will. Rather it comes from the great producing organization which reaches forward to control the markets that it is presumed to serve".

This model worked for GM smoothly until the oil crisis broke out in 1973, and Japanese competitors seized the opportunity by appealing to the sovereignty of the consumer.

Today, the same situation is observed at the smartphone market. Asian phones, though based on a US operating system, are leaders in worldwide sales.

The situation is similar in the geopolitical world, where China successfully implements a capitalist economy while combining it with the Communist regime, thereby creating a real alternative to US domination. The question is: How long will it take to remove it from the hegemonic country's position?